Tourist tax: Lisa Nandy says Labour may ‘explore’ restoring VAT free shopping
Lisa Nandy has said the government “could explore” restoring VAT free shopping after hearing “very loud and clear” the calls from the industry to scrap the so-called tourist tax.
The culture, media and sport secretary told Elle UK magazine that fashion was in the “soul of the nation” and ministers recognised its “centrality” to the economy.
Nandy said the industry was at the “heart” of the government’s industrial strategy, and argued the UK has “lost its self-confidence” over the last decade.
She told the magazine that she had “very loud and clear the calls from the fashion industry” to reintroduce tax-free shopping, dubbed the tourist tax.
However, she said this was off the table at the moment because the previous administration “scrapped” it because they thought it had “limited economic value”.
“If it is a benefit, it’s something that we’ll explore, but at the moment, that’s not something we’re proposing to do,” the MP for Wigan added.
Fashion ‘centrality’
The schemes allow tourists to be refunded for VAT on goods bought at UK airports and high street shops when they take it back home.
Nandy also said: “You have a new government that sees the centrality of fashion to the whole country, not just the economy, as properly at the heart of our industrial strategy, which is where it belongs, but also to the soul of the nation.”
Referencing the 14 years that the Conservatives were in power before the 2024 election, she said: “When I reflect on the last decade, I feel the country has lost its self-confidence.
“But we are so good at the things that sit within my remit, whether it’s film, fashion, music, arts, museums, galleries.
“They could all do so much more if they had a government that could match that level of ambition. And that’s what we’re determined to be.”
In 2024, the British Fashion Council outlined its priorities for the incoming government, saying it had joined more than 400 other businesses in the retail, hospitality, tourism, travel, and other sectors in calling for the tax free shopping scheme to be restored.
Tourist tax letter
It claimed that the UK not offering this incentive to “overseas visitors” placed “UK fashion designers, retailers and manufacturers at a significant competitive disadvantage”.
Ahead of the Labour government’s first Budget in October, more than 300 business leaders wrote to Chancellor Rachel Reeves asking for tax-free shopping in the UK to be reinstated, calling the so-called tourist tax a “spectacular own goal” for retail.
Signatories included hotelier Sir Rocco Forte, Paul Smith, Heathrow, John Lewis and Shakespeare’s Globe.
The policy has been blamed for a slump in luxury selling in the capital, with visitors reportedly travelling to London for a cultural visit and then heading to Paris or Milan to shop.
“This does not just affect a few luxury stores in London’s West End, as some have claimed,” business leaders wrote in the letter to Reeves.